An Important Perspective on US Government Debt

I’ve noticed that when there’s public discussion on US government finances, the prevailing stance is that the government is heavily in debt and it is a terrible situation for the country to be in. For example:

• CNN quoted Maya MacGuineas, President of the Committee for a Responsible Federal Budget in January 2024: “Though our level of debt is dangerous for both our economy and for national security, America just cannot stop borrowing”
• In June 2025, Market Watch wrote: “America’s current debt level stands at roughly 121% of GDP… The debt burden is no longer just a distant concern. It is a present and pressing problem”
• Ray Dalio, who is the founder of one of the largest – if not the largest – hedge fund in the world, BridgeWater, commented in June 2025 on American government debt: “[The US government] has accumulated a big debt—approximately six times the amount that it is bringing in each year (about $30 trillion), which equals about $230,000 per household that you have to take care of”

The thing about debt is that there are two sides to the coin. A balance sheet for a company has both assets and liabilities and the same goes for a country. So while the US government has plenty of debt, which are liabilities, it also has assets.

And what does the US government’s assets look like? According to the Federal Reserve, the US government’s assets have a value of just US$5.6 trillion as of September 2024, which is far lower than its liabilities of US$45.5 trillion, most of which are US28.3 trillion in government debt. This does not look good.

But, according to the Institute of Energy Research, the US government has ownership of a huge mineral estate, consisting of natural resources such as oil, natural gas, and coal, which had a value of US$150 trillion as of January 2013. The value of these assets are not recorded on the Federal Reserve’s accounting of the US government’s balance sheet. The prices of oil, natural gas, and coal today are within the same ballpark as what they were in January 2013 and this means the US government’s US$150 trillion in mineral assets back then would have around the same value today. In other words, the US government’s assets are much higher than its liabilities.

One more point worth noting is that Federal Reserve data show American households have a total net worth – that would be household assets minus household liabilities – of US$170 trillion in the first quarter of this year. This net worth is again much higher than US government liabilities. The US$230,000 in debt per US household that Ray Dalio said the US government has saddled the country’s population with, turns out to be much lower than US households’ net worth. 

When it comes to the idea of the US government being heavily in debt, I think the reality is different. Yes, the US government has been borrowing like a drunken sailor, with a budget deficit that currently runs at around 7% of GDP – this is absolutely not sustainable in the long run. But right now the balance sheet of the US government is still really healthy when the true value of its assets is considered and this gives the government plenty of buffer time to right the ship. 

In public discussions of US government debt, I find that the asset-part of the balance sheets of the US government and households is often missing – and this is an important perspective we should all be aware of.

---

Disclaimer: The Good Investors is the personal investing blog of two simple guys who are passionate about educating Singaporeans about stock market investing. By using this Site, you specifically agree that none of the information provided constitutes financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. I do not have a vested interest in any companies mentioned. Holdings are subject to change at any time.